Star Hotels and Ors Vs. Union of Centaur-Tulip Employees And Ors  Insc 546
(10 May 2007)
DR. ARIJIT PASAYAT & LOKESHWAR SINGH PANTA
CIVIL APPEAL NO. 2431 OF 2007 (Arising out of S.L.P. (C) No. 6787 of 2006)
Dr. ARIJIT PASAYAT, J.
Challenge in this appeal is to the order passed by a Division Bench of the
Bombay High Court dismissing the Letters Patent Appeal filed by the appellants.
Factual background as presented by the appellants is as follows:
An agreement was entered into between the appellants and the Hotel
Corporation of India relating to purchase of hotel called Centaur Hotel, Juhu Beach,
on 31.3.2003. On 11.3.2002, an agreement was entered into wherein it was
stipulated that Voluntary Retirement Scheme (in short 'VRS') shall be
introduced within one year from the transfer dated 31.5.2002 i.e by 31.5.2003.
A Writ Petition was filed on 30.5.2003 with a prayer to enforce the VRS and
alternatively it was prayed that the appellant-company be directed to
independently float and pay according to VRS. By order dated 8.7.2003, the High
Court directed the appellant-company to consider and float the VRS. The said
scheme was floated on 1.10.2003. On 27.10.2003 there was a meeting of the
recognized Union functionaries with the functionaries of the appellant-company.
A request was made to extend the time of VRS upto 30.11.2003 to accept the
option. This was confirmed by the Union's Advocate letter dated 29.10.2003. On
29.1.2004, applications of 570 workers for VRS were accepted and payment was to
be made by 29.4.2004. The terms were set out in Clause 3.3. On 1.7.2004 notice
of motion was taken by officers of the appellant-company and on 2.7.2004 by the
workers. The prayer essentially was to do the needful within such time as may
be determined by the Court. In the counter affidavit, the resolutions were
referred to. One Sada Parab represented the Union of workers. The modalities
for implementation of the VRS were fixed for both the officers and the workers.
The schedule for payments was also fixed.
Subsequently, there appears to be change of mind and after acceptance,
because of financial difficulties there was delay in implementation of the VRS.
Majority of the workers accepted the cheques without demur. Some of the
employees formed a new trade union called "Union of Centaur Tulip
Employees". A request was made by the employees for splitting in each case
the cheque amount i.e. VRS amount and on 5.5.2005 the writ petition was
withdrawn. Separate cheques were issued but the respondents refused to accept
the cheques so far as they related to the VRS scheme. The loan amounts were
adjusted and no objection was raised.
Complaint was filed under the Maharashtra Recognition of Trade Unions and
Prevention of Unfair Labour Practices Act, 1971 (in short the 'Trade Union
Act'). Objection was filed by the present appellant taking the stand that in
view of various decisions of this Court complaint was not maintainable. The Industrial
Court rejected the objection and held that the complaint was maintainable.
Writ petition was filed by the appellant and the learned Single Judge
dismissed the same. As noted above, the Division Bench also affirmed the views
of the Industrial Court and the learned Single Judge.
In support of the appeal, learned counsel for the appellants submitted that
unfortunately both the Industrial Court and the High Court did not consider the
effect of several judgments of this Court which had direct bearing on the
present issue. Before a learned Single Judge, a plea was specifically urged but
not dealt with. After having concluded that the relationship of employer and
employee existed learned Single Judge observed that whether relationship of
employer and employee existed was kept open and the parties are at liberty to
advance evidence if any on that point. The High Court also did not consider
those aspects. It is, therefore, submitted that the impugned orders are liable
to be set aside.
Per contra, learned counsel for the respondents submitted that by now the
whole enquiry would have been over and unnecessarily the appellants have
prolonged the proceedings.
We find that on the question of existence of relationship between the
employer and the employee in the background of the Trade Union Act several
decisions have been rendered (See Vividh Kamgar Sabha v. Kalyani Steels Ltd.
and Anr. (2001 (2) SCC 381), Cipla Ltd. v. Maharashtra General, Kamgar Union
and Ors. (2001 (3) SCC 101) and Sarva Shramik Sangh v.
Indian Smelting & Refining Co. Ltd. and Ors. (2003 (10) SCC 455).
Though the plea appears to have been specifically urged before the
Industrial Court and the High Court, no finding has been recorded on the basic
issue. It is also necessary to take note of what has been stated by this Court
in Vice-Chairman and Managing Director, A.P. SIDC Ltd. and Anr. v. R.
Varaprasad and Ors. (2003 (11) SCC 572). In that case it was held that
delayed payment per se did not render the scheme to be frustrated, on the
contrary, the entitlement is of monthly wages. The decision in General Labour
Union (Red Flag), Bombay v. Ahmedabad Mfg. & Calico Printing Co. Ltd. and
Ors. (1995 Supp (1) SCC 175) also throws considerable light on the controversy.
In Cipla's case (supra) this Court observed that the dispute is of summary
nature. In that case it was inter alia observed as follows:
"5. ..Therefore, the Labour Court dismissed the complaint filed by the
first respondent Union. When the matter was carried by revision under the Act
the Industrial Court dismissed the revision application by re- iterating the
views of the Labour Court.
6. In the writ petition the Division Bench of the High Court took a
different view of the matter and allowed the complaint.
Before the High Court several decisions were referred to including the
decision of this Court in General Labour Union (Red Flag), Bombay v.
Ahmedabad Mfg. & Calico Printing Co. Ltd &
Ors., 1995 Supp. (1) SCC 175. In that case the complaint of the Union was
that 21 workmen who were working in one of the canteens of the
respondent-company were not given the service conditions as were available to
the other workmen of the company and there was also a threat of termination of
This Court proceeded to consider the case on the basis that their complaint
was that the workmen were the employees of the company and, therefore, the
breach committed and the threats of retrenchment were cognizable by the
Industrial Court or the Labour Court under the Act. Even in the complaint no
case was made out that the workmen had ever been accepted by the company as its
employees. On the other hand, the complaint proceeded on the basis as if the
workmen were a part of the work force of the company. This Court noticed that
the workmen were never recognised by the company as its workmen and it was the
consistent contention of the company that they were not its employees. In those
circumstances, the Industrial Court having dismissed the complaint and the High
Court having upheld the same, this Court stated that it was not established
that the workmen in question were the workmen of the company and in those
circumstances, no complaint could lie under the Act as was held by the two
courts. In that case it was the admitted position that the workmen were
employed by a contractor, who was given a contract to run the canteen in question.
Thereafter, the High Court adverted to the decision of this Court in Gujarat
Electricity Board, Thermal Power Station, Ukai, Gujarat v. Hind Mazdoor Sabha
& Ors., (1995 (5) SCC 27) wherein it was noticed that the first question to
be decided would be whether an industrial dispute could be raised for abolition
of the contract labour system in view of the provisions of the Act and, if so,
who can do so. The High Court was of the view that the decision in General
Labour Union (Red Flag), Bombay v. Ahmedabad Mfg. &
Calico Printing Co. Ltd & Ors. (supra) would make it clear that such a
question can be gone into and that the observations would not mean that the
workmen had to establish by some other proceedings before the complaint is
filed or that if the complaint is filed, the moment the employer repudiates or
denies the relationship of employer and employees the court will not have any
jurisdiction. The observation of this Court that it is open to the workmen to
raise an appropriate industrial dispute in that behalf if they are entitled to
do so has to be understood in the light of the observations of this Court made
earlier. The High Court further held that the judgment in General Labour Union
(Red Flag), Bombay v.
Ahmedabad Mfg. & Calico Printing Co. Ltd &
Ors. (supra) was confined to the facts of that case. On that basis the High
Court proceeded to further consider the matter and reversed the findings
recorded by the two courts and gave a finding that the workmen in question are
the workmen of the appellant-company.
The object was also spelt out at paragraph 8. It reads as under:
"8. But one thing is clear - if the employees are working under a
contract covered by the Contract Labour (Regulation & Abolition) Act then
it is clear that the labour court or the industrial adjudicating authorities
cannot have any jurisdiction to deal with the matter as it falls within the
province of an appropriate Government to abolish the same. If the case put
forth by the workmen is that they have been directly employed by the appellant-
company but the contract itself is a camouflage and, therefore, needs to be
adjudicated is a matter which can be gone into by appropriate industrial
tribunal or labour court. Such question cannot be examined by the labour court
or the industrial court constituted under the Act. The object of the enactment
is, amongst other aspects, enforcing provisions relating to unfair labour
practices. If that is so, unless it is undisputed or indisputable that there is
employer-employee relationship between the parties, the question of unfair
practice cannot be inquired into at all. The respondent union came to the
Labour Court with a complaint that the workmen are engaged by the appellant
through the contractor and though that is ostensible relationship the true
relationship is one of master and servant between the appellant and the workmen
in question. By this process, workmen repudiate their relationship with the
contractor under whom they are employed but claim relationship of an employee
under the appellant. That exercise of repudiation of the contract with one and
establishment of a legal relationship with another can be done only in a
regular industrial tribunal/court under the I.D.Act".
In Sarva Shramik Sangh's case (supra) it was observed at para 24 as follows:
"24.In order to entertain a complaint under the Maharashtra Act it has
to be established that the claimant was an employee of the employer against
whom complaint is made under the ID Act. When there is no dispute about such
relationship, as noted in para 9 of Cipla case the Maharashtra Act would have
full application. When that basic claim is disputed obviously the issue has to
be adjudicated by the forum which is competent to adjudicate. The sine qua non
for application of the concept of unfair labour practice is the existence of a
direct relationship of employer and employee. Until that basic question is
decided, the forum recedes to the background in the sense that first that
question has to be got separately adjudicated. Even if it is accepted for the
sake of arguments that two forums are available, the court certainly can say
which is the more appropriate forum to effectively get it adjudicated and that
is what has been precisely said in the three decisions.
Once the existence of a contractor is accepted, it leads to an inevitable
conclusion that a relationship exists between the contractor and the
In Bank of India and Ors. v. K.V. Vivek Ayer and Anr.
(2006 (9) SCC 177), it was held that after acceptance even of a part, there
is no scope for withdrawal from a scheme.
Since the relevant aspects have not been considered by the Industrial Court
and the High Court, we set aside the impugned orders of the Industrial Court
and the learned Single Judge and the Division Bench and direct re-
consideration, by learned Single Judge, of the issues, as noted above.
Consideration shall be of applicability of the three judgments in Vividh
Kamgar, Cipla and Sarva Shramik cases (supra). The effect of part acceptance
shall be considered as also the question as to when there has been adjustment
of the sums payable in respect of the VRS. As the matter is pending since long
it would be appropriate for the learned Single Judge to dispose of the matter
as early as practicable, preferably within three months from the date of
receipt of this order. To avoid unnecessary delay let the parties appear before
the learned Single Judge on 11.6.2007 for hearing of the matter.
Learned Chief Justice is requested to pass necessary orders in this regard. It
is stated that certain motions have been taken out. They shall be considered
while hearing the matter in the light of the present judgment.
The appeal is accordingly disposed of with no order as to costs.